Retirement Requires a Shift in Thinking
The risk-reward equation changes when you retire. It's no longer about growing your wealth: It's about protecting what you've got. So get ready to flip your mental switch from accumulation mode to preservation.

For most of your investing life, you’ve probably been encouraged to build a portfolio that balances risk and return — achieving the highest returns possible based on your personal tolerance for risk.
For most people, that means living with a certain amount of volatility in exchange for growing a comfortable nest egg for their retirement years. You can lose money taking on too much risk, of course, but you won't gain much ground being too risk-averse. So, a larger investment in the stock market (60%, 70% or more) would be a must for those looking to help grow their wealth over the long term.
In retirement, though, things are different, and a shift in thinking is required.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The goal for most people should change as retirement nears — from growing their nest egg to helping to protect their savings and ensuring the money they’ve accumulated can provide them with enough income to last 20 to 30 years or more.
That means a shift in mindset and a transition in strategies.
The problem is, the financial industry has done such a good job of pushing accumulation at (almost) any cost, it can be tough for some to switch their focus to the next stages of investing: preservation and distribution.
Recently, for example, we put together a retirement plan for a potential client who had saved a hefty chunk of money — more than $3 million. We included an income plan — using a bucketing strategy — that laid out where he would get his money in retirement.
With bucketing, we typically look at three time frames, which could be labeled “now,” “soon” and “later.”
The “now” bucket is designed to cover living expenses and larger emergency expenses in the first years of retirement. The “soon” bucket holds money you may need to access a few years down the road. And both buckets are built to withstand a market downturn early in retirement — a time when “sequence of returns risk” can devastate a portfolio.
In this case, the first bucket, the “now” bucket, was set up with cash equivalents and fixed-income investments. The second, “soon,” bucket included equities (about 50%). The third, “later,” bucket had a higher percentage of equities, designed for long-term growth and legacy planning.
When presented with the potential plan, the client felt that we had put too much into fixed income, especially at the beginning of the plan. The client thought more growth opportunity was needed and wanted to take more risk. So, rather than focusing on how to generate income from the portfolio, the client was still focusing on trying to achieve potential higher rates of return.
We had covered the biggest concerns the client had come to us with: How long the money would last, and where exactly to pull income from. But in the end, the client focused more on maximizing the rate of return.
Those are two different goals.
I can’t blame the investor, who had been trained for 30 years to think about risk and reward, account values and returns.
But I do hope, as an industry, we can help people understand that:
- Cash and fixed-income investments can play a critical role in weathering economic storms and can help protect what individuals have in retirement.
- Each investment has valuable features people can use to their advantage. But needs are different in retirement, and a person’s plan should reflect that.
- Even if they can handle a more aggressive investing strategy, why risk it if they don’t have to?
In retirement, it’s important to think of your savings as income rather than a lump sum. It’s not all about achieving maximum return on investment anymore; it’s about how you can get the maximum return from your portfolio and into your pocket.
Instead of sticking with a collection of random investments or going with a cookie-cutter asset allocation, talk with your adviser about ways to help build a strategic plan for how you’re going to distribute your assets to yourself.
Kim Franke-Folstad contributed to this article.
Fee-based financial planning and investment advisory services are offered by Imber Financial Group LLC, a Registered Investment Advisory Firm, and Capital Asset Advisory Services LLC, an SEC-Registered Investment Adviser (Registration does not imply a certain level of skill or training). Insurance products and services are offered through Imber Wealth Advisors Inc. Imber Financial Group LLC and Imber Wealth Advisors Inc. are affiliated companies. Investing involves risk, including the potential loss of principal.
The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Jon Imber is the president and owner of Imber Wealth Advisors. A fiduciary adviser, he has passed the Series 65 exam and holds a life insurance license in Michigan. He's a member of the Financial Planning Association and a Registered Financial Consultant (RFC®). He earned his bachelor's degree in marketing and business administration from Northwood University.
-
Four Surprising Signs You’ll Never Retire (and How to Fix Them)
Gearing up to retire? If any of these four signs ring true, you may want to make some changes before you do.
-
Stocks Rise After Trump-Powell Fed Tour: Stock Market Today
Nvidia hit a new all-time high intraday, but another renowned semiconductor name and some less iconic stocks were bigger movers Friday.
-
How Divorced Retirees Can Maximize Their Social Security Benefits: A Case Study
Susan discovered several years after she filed for Social Security that she is eligible to receive benefits based on her ex-spouse's earnings record. This case study explains how her new benefits are calculated and what her steps are to claim some of the money she missed.
-
From Piggy Banks to Portfolios: A Financial Planner's Guide to Talking to Your Kids About Money at Every Age
From toddlers to young adults, all kids can benefit from open conversations with their parents about spending and saving. Here's what to talk about — and when.
-
I'm an Investment Pro: Here's How Alternatives Could Inject Stability and Growth Into Your Portfolio
Alternative investments can often avoid the impact of volatility, counterbalancing the ups and downs of stocks and bonds during times of market stress.
-
A Financial Planner's Guide to Unlocking the Power of a 529 Plan
529 plans are still the gold standard for saving for college, especially for affluent families, though they are most effective when combined with other financial tools for a comprehensive strategy.
-
An Investment Strategist Takes a Practical Look at Alternative Investments
Alternatives can play an important role in a portfolio by offering different exposures and goals, but investors should carefully consider their complexity, costs, taxes and liquidity. Here's an alts primer.
-
Ready to Retire? Your Five-Year Business Exit Strategy
If you're a business owner looking to sell and retire, it can take years to complete the process. Use this five-year timeline to prepare and stay on track.
-
A Financial Planner's Prescription for the Headache of Multiple Retirement Accounts
Having a bunch of retirement accounts can cause unnecessary complications. Consolidation can make it easier to manage your savings and potentially improve investment outcomes.
-
Overpaying for Financial Advice? A Financial Planner's Guide to Fees
Take five minutes to review how much you're paying for financial advice. If you're overpaying, you could be better off with an adviser who charges a flat fee.